Step 4 - Conduct a feasibility study

From Municipal Cooperation

Establishing IMC
PHASE 1: Initiating cooperation
PHASE 2: Establishing cooperation
PHASE 3: Implementing IMC
PHASE 4: Evaluating IMC

If the legal environment allows the initiation of IMC in the areas identified by the potential IMC partners, the next task is to conduct a feasibility study. This is a necessary step for officials to determine whether the areas of cooperation identified by the municipalities make sense economically, operationally and administratively. A sophisticated feasibility study is not necessarily needed, but it must address a number of key questions highlighted in Box 14.

The feasibility study can be carried out by:

  1. An external expert: the quality of the study may be good, but municipal involvement and ownership will be limited (cost may be high);
  2. The executives of the municipalities concerned: the quality of the study may be low since the municipal staff may lack capacity and experience (costs will be low);
  3. The executives of the municipalities concerned with the support of an external expert: this is possibly the best approach since it combines expertise with municipal involvement and ownership.

The costs of the expert should be shared by all municipalities concerned according to the agreed rule for funding IMC preparatory activities. The share of each municipality may be equal or proportional to its population. In many countries, the central government or regional authorities provide grant financing for IMC feasibility studies. The municipalities should explore the possibility of accessing such funding

Box 15: Typical content of an IMC feasibility study

For the area (s) identified as having IMC potential and allowed by law, the feasibility study should:
  1. Describe how the service is performed by each municipality
  2. Identify the current level of service in each municipality in quantifiable measures and its strengths and weaknesses
  3. Estimate the costs currently borne by each municipality to perform the service
  4. Identify the level and quality of service required over the next two to five years
  5. Assess the possibility of improving the level/quality and/or reducing the costs of delivering the service over the next two to five years by:
    • sharing common equipment
    • sharing human resources
    • jointly investing in more expensive equipment
    • hiring more and better qualified human resources
    • better coordinating bordering services
    • other.
  6. Assess the costs in achieving the objectives of the cooperation – An annual cost calculation will need to be developed based on planned service levels for each participant
  7. Review what other municipalities have done in similar service areas
  8. Provide a summary of the findings of the legal assessment and of the legal provisions pertaining to the service area
  9. Provide final recommendations on:
    • how much financial resources will be saved
    • the service level/quality improvements
    • the other potential benefits
    • who will be positively affected and who will be negatively affected
    • the equipment, facilities, and human and financial resources that will be required from each municipality
    • which external resources can be mobilized (subsidies or grant funding from government, private investment or donor resources)
    • which legal provisions must be observed
    • which legal forms may be most appropriate (handshake, agreement, contract, establishment of a legal entity)
    • options for organization and management
    • the implications on financing IMC
    • risks involved

IMC may involve the provision of an entirely new service. In this case, only items 4., 6. and 9. will apply.